State Inheritance & Estate Taxes
While the federal estate tax exemption is historically high (over $13 million per person), many states have their own "death taxes" with much lower thresholds.
Estate Tax vs. Inheritance Tax
- Estate Tax: Paid by the *estate itself* before assets are distributed. Usually only applies to estates over a certain dollar amount.
- Inheritance Tax: Paid by the *person receiving* the money. The rate usually depends on their relationship to the deceased (spouses are usually exempt; distant relatives or friends pay the highest rates).
Maryland: The Double Hit
Maryland is currently the only state in the U.S. that levies both an estate tax and an inheritance tax.
States with an Estate Tax (2024 Data)
Connecticut, Hawaii, Illinois, Maine, Maryland, Massachusetts, Minnesota, New York, Oregon, Rhode Island, Vermont, Washington, and Washington D.C.
Note: Thresholds vary wildly. Massachusetts and Oregon tax estates starting at just $1 million.
States with an Inheritance Tax
Iowa (phasing out by 2025), Kentucky, Maryland, Nebraska, New Jersey, and Pennsylvania.